The House Thornburg Lost

Behind Santa Fe’s devastated mortgage company lies an American story of triumph and loss

The first time Garrett Thornburg was hurt by the foreclosure of someone else’s home, it was 1986. The house was off Old Pecos Trail, at 512 Camino Lejo. It belonged to Thornburg’s first wife, a Swedish artist, who lived there with the couple’s son, then 6.

The second time is now. The process took years and involved thousands of Americans who couldn’t afford their home loan payments. The mortgage crisis ruined Thornburg’s balance sheets—and the country’s.

Unlike many fellow magnates, Thornburg has felt the economy’s harsher side. He even once collected unemployment, so perhaps he can relate to his former workers.

At his top, Thornburg’s jet landed in Paris; he fished in Patagonia. Newspapers called him a genius. Charities honored him as a “treasured citizen.” Politicians paid respect to a man whose business they may not have understood, except to the extent that it was successful.

Thornburg’s empire was built on his grasp of both market trends and government regulations. Then the ground moved. Last week, after 14 years of growth and two years on life support, Thornburg Mortgage announced its bankruptcy. The word came on April Fools’ Day. Nobody laughed. Two days later, the company laid off 130 of 150 employees.

A “difficult day,” CEO Larry Goldstone called it.

As rise-and-fall stories go, Thornburg’s is neither the biggest nor the most shocking. But it is worth studying because Harold Garrett Thornburg Jr. is more than a man of his time. He is a man who made his time.

Thornburg declined an interview.

“Here’s this guy, a Harvard Business School alumni: Why in the hell did he come to Santa Fe, New Mexico to start up an investment and real estate company? He expected to become—and he did—a big fish in a small pond. That’s a peculiar kind of person. That’s a personality profile that leads people to think they’re the master of the universe,” Patrick Collins, a retired Wall Streeter who campaigned against Thornburg’s new Ridgetop Road headquarters, says.

“Two years ago, he was the chairman of a New York Stock Exchange-listed company. He was pumping out good cash dividends to the owners of Thornburg Mortgage, Inc. He was building this famous—in his estimation—building. Now he’s the chairman of a company that is not a favorite of a lot of people who owned the stock at $40 and now it’s 5 cents.”

(The stock actually peaked at $32 about a year ago; it’s now 1 cent.)

When a big fish flops, the ripples go far.

Thornburg’s finances are Santa Fe’s problem. It hurts to have 130 people lose well-paying, financial-sector jobs. “I have never worked for a finer man or a finer company,” David Miller, spokesman for Thornburg Investment Management, which remains in business, says.

The bankruptcy also raises questions. Those jobs, and the wealth they created, justified the tax breaks Thornburg’s companies won over the years and the public accolades they’ve received. Was all that deserved?